U.S. stocks sold off sharply Tuesday, with the Dow industrials dropping 170 points, as weaker-than-expected manufacturing data in China renewed worries about global growth and sent investors scampering out of risky assets.

The S&P 500 SPX, -0.63% slumped 22 points, or 1.1%, to 2,059, with all 10 main sectors trading lower. Energy and materials led the losses, falling 2.7% and 2% respectively, following a drop in oil prices. Financials were also hit hard, down 1.8%.

“On risk-off days when investors are worried about global growth the assumption is that the Federal Reserve will refrain from raising rates. It is common to see financials sell off when investors think rates will stay lower for longer,” said Maris Ogg, president at Tower Bridge Advisors. Lower rates hurt bank-lending margins.

“Energy shares went too far too fast since oil prices rallied off their lows in February, so any pullback in oil will hit oil companies hard,” Ogg said.

Augustin Eden, research analyst at Accendo Markets, said Tuesday’s negative action came as investors digested the latest news from China and Australia. In China, a private gauge of nationwide factory activity in China fell to 49.4 in April, indicating a faster pace of contraction and missing analyst forecasts.

“And there’s been an Australia interest-rate cut that’s potentially signaling a little bit of panic over on that side of the world and that has weakened the Aussie dollar quite a lot,” Eden said.

“If you look at gold, it’s trading around $1,300 an ounce, which if it breaks above that, that’s a pretty good sign there’ll be some safe-haven seeking. So there’s a bit of fear in the markets this morning,” he added.

The dollar, however, fell against most other major currencies as the yen extended its recent gains against the greenback. The dollar USDJPY, -0.21% bought ¥106.29, compared with ¥106.54 late Monday, to trade around a level not seen since 2014.

Data and Fed speakers: There was little on the economic data front on Tuesday, with only monthly auto sales among major releases.

U.S. light-vehicle sales regained momentum last months thanks to cheap credit, low gasoline prices and rising consumer confidence, with sales expected to hit a new monthly record high. However, car sales data didn’t help car makers, as General Motors Co.GM, -1.04% and Ford Motors Co.F, -0.73% fell more than 1%.

Cleveland Fed President Loretta Mester said that waiting for markets to calm down before raising interest rates may backfire and just lead to more volatility. Mester is a voting member of the policy-setting committee this year.

Atlanta Fed President Dennis Lockhart, who is a non-voter, will give a speech on the economic outlook and monetary policy in Jacksonville, Fla., at 7 p.m. Eastern.

Other markets: Chinese stocks ended firmly higher, as investors appeared to welcome President Xi’s call late last Friday—after markets had shut—to maintain a “healthy development of the stock market.” Chinese markets were closed for trade on Monday for a holiday.

May 1, 2016EditorComments Off on Fintech entrepreneur goes for dividend stocks – AsiaOne

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